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Saturday, April 12, 2025 Vol. 20 No. 182
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BSP ‘MORE DOVISH’ NOW IN POLICY STANCE – GOV
Q&A WITH FRENCH MINISTER SAINT-MARTIN:
In time of crisis, friendships beckon
CAN TUNA OZTURK VIA DREAMSTIME.COM
LAURENT SAINT-MARTIN, French Minister Delegate for Foreign Trade and French Nationals Living Abroad
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By Reine Juvierre S. Alberto
ESPITE the risks from Donald Trump’s tariff swings, the Bangko Sentral ng Pilipinas (BSP) is becoming “more dovish” in its policy stance for this year. In an interview with Bloomberg Television on Friday, BSP Governor and Monetary Board Chairman Eli M. Remolona Jr. said there will be “a few more” reductions in the key policy rate this year. “Our forward guidance says that we’ve become somewhat more dovish now than a week ago,” Remolona said. On Thursday, the BSP’s Monetary Board lowered the Target Reverse Repurchase (RRP) rate by 25 basis points to 5.50 percent. The interest rates on the overnight deposit and lending facilities were also reduced to 5 percent and 6 percent, respectively (See: https://busi nessmirror.com.ph/2025/04/11/ bsp-lowers-key-rate-by-25-bpsmore-cuts-seen/). As risks to the inflation outlook have eased, Remolona said the BSP is reviewing the government’s inflation target of 2 to 4 percent until 2028, which he deemed to be “a bit high.” “Maybe 2.5 percent is a better
BSP Governor Eli M. Remolona Jr., on effects of trade tensions: “In general, we’re looking at lower growth because of the uncertainty [and] volatility in the markets, as well as the prospective tariffs.”
[inflation] target, but that’s for next year,” Remolona said. Most other central banks have a 2-percent inflation target, while the Philippines has a midpoint target of 3 percent, the governor added. The BSP has reduced its riskadjusted inflation forecast to 2.3
KEY CONCERNS:
n US tariffs (esp. on China) may hit PH indirectly n Trade shrinkage = supply issues = inflation risk n China’s economy crucial to PH trade
percent for 2025 from 3.5 percent. The Central Bank’s forecast for 2026 and 2027 also declined to 3.3 percent and 3.2 percent, respectively. “The lower inflation rates that we’re looking at give us more degrees of freedom,” Remolona said after the reduction of key policy rates on Thursday. However, he did not dismiss the impact of higher United States tariffs on the Philippines’ neighboring countries despite the country being slapped with a 17-percent reciprocal tariff. “In general, we’re looking at lower growth because of the uncertainty [and] volatility in the markets, as well as the prospective tariffs,” Remolona said. While Trump announced a 90day pause on reciprocal tariffs, except for China, Remolona said this could be “bad” for the Philippines due to that country’s being the Philippines’s top source of imports.
The China factor
“WHAT happens to China affects us. We don’t know exactly how at this point, but we know there will be some effect,” Remolona said.
“We see trade shrinking and shrinking trade adds to inflation. It’s reducing supply. So that would be somewhat inflationary, as well as a negative for growth,” the governor added. Remolona said the Central Bank is more concerned about risks to growth and prospective inflation rather than the peso exchange rate as it intervened less in the market. While local inflation is seen to cool, unlike the rest of the world, Remolona had said the Philippine economy will slow down like the rest of the world due to the impact of tariffs. The Monetary Board still has four monetary policy meetings left this year. “We don’t think we will cut between meetings. So we’re not sure how many more cuts, but I would say a few more this year. It depends on the data,” Remolona said. The key policy rate, at the moment, is still “somewhat above” the Goldilocks rate, or the ideal level, according to Remolona. “We’re somewhat restrictive still and we’re moving towards a neutral stance,” he said. “We want to get to the neutral rate smoothly. We don’t want to go too much below it, because that would be inflationary. So we’re looking at the numbers just to make sure we don’t overdo the easing,” he added.
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HE French minister delegate in charge of foreign trade arrived in the Philippines late Thursday, at a time when the United States is planning to impose sweeping tariffs across the globe and potentially disrupting global trade. Laurent Saint-Martin, French Minister Delegate for Foreign Trade and French Nationals Living Abroad, said the timing of his visit to the Philippines “could not be more appropriate.” In a question-and-answer interview with the Business Mirror’s Malou Talosig-Bartolome, Minister Saint-Martin elaborated on the agenda of his Manila trip. See related story on A3, News. 1. What is the purpose of your visit here? The Philippines is a key diplomatic, economic and commercial partner of France in Southeast Asia. Our two countries share common interests in supporting a rules-based international order, trade and investment, regional and global security, including stability and economic development. We share the same ambition to keep on developing our partnership. The timing could not be more appropriate. As tensions are running high in an increasingly polarized global environment, France is offering nothing less than a mutually beneficial opportunity for most needed political, economic and strategic diversification. Look at the global landscape today: established value chains are entering times of uncertainty. Some are tempted to leverage trade and investment relationships to further their own geopolitical goals. Let me be clear: that is not the French way. That is not the European way. In an environment this challenging, “derisking” is becoming the key word, and we all need friends we can trust and partners upon whom we can safely rely. I am here today because France sincerely believes that the Philippines are such a friend and partner, as evidenced by the discussions between Presidents Macron and Marcos Jr. Continued on A2
Semana Santa break has Pinoys packing for popular destinations here and abroad
Investor jitters push down FDI net inflows in January
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CONOMIC uncertainties caused investors to scale down their funding on the Philippines’ debt instruments at the start of the year, as foreign direct investment (FDI) net inflows slumped. Data from the Bangko Sentral ng Pilipinas (BSP) showed longterm investments made by foreign investors amounted to $731 million in January 2025, lower by 20 percent from the $914 million recorded in January 2024. The Central Bank traced the decline in FDI net inflows to the decrease in nonresidents’ net investments in debt instruments: it was down by 37.7 percent year-on-year to $519 million from $833 million. However, the BSP said this was tempered partly by the shift in nonresidents’ net investments in equity capital—other than reinvestment of earnings—which turned to net in-
flows of $88 million from net outflows of $11 million. “The decline in FDI inflows [may] be attributed to economic uncertainty, especially with the onset of trade wars,” according to Reinielle Matt M. Erece, economist at Oikonomia Advisory & Research Inc. Erece said investors are “unwilling” to invest in capital and instead hold safer assets, such as gold or treasuries, to maintain liquidity amid the “risky” economic environment. FDIs are investments that are made by foreign players in the Philippines in the hopes of long-term return. These investments can be in the form of equity capital, reinvestment of earnings and borrowings. BSP data further showed nonresidents’ reinvestment of earnings increased by 36 percent to $125 million in January 2025 from the $92-million level
KEY FIGURES (JANUARY 2025):
Total FDI Net Inflows: n $731 million 20% from $914 million in Jan 2024 Investments in Debt Instruments: n $519 million 37.7% YoY from $833 million
Equity Capital (Net Inflows): n $88 million (from net outflows of $11 million in Jan 2024) Reinvestment of Earnings: n $125 million 36% from $92 million
in January 2024. Equity capital placements in January 2025 originated primarily from Japan, the United States, Singapore, and Malaysia. These investments were channeled mostly to the manufacturing, financial and insurance, and real-estate industries. Broken down, equity capital
placements during the month were sourced mostly from Japan at 48 percent; the United States, 23 percent; Singapore, 13 percent; and Malaysia, 8 percent. Investments were channeled mainly to the manufacturing (48 percent); real estate (17 percent); financial and insurance (20 percent), and others (15 percent). Since these are in the country for a longer term compared to their short-term counterpart, the foreign portfolio investments (FPI), FDIs usually create jobs for Filipinos and have a multiplier effect on the economy. Reluctant investor sentiment is expected to continue in the coming months as trade conflict escalates between the United States and China, among of the Philippines’s largest trading partners, Erece said. Continued on A2
CATICLAN jetty port terminal YOORAN PARK | DREAMSTIME.COM
By Ma. Stella F. Arnaldo Special to the BusinessMirror
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AKASYONISTAS are heading off to major leisure destinations here and abroad for the Holy Week, which begins on April 13, Palm Sunday. According to carriers Cebu Pacific (CEB) and Philippines Air Asia (PAA), among the popular local destinations next week are Caticlan, Cebu, and Palawan, encouraging them to increase flight frequencies between certain routes. International destinations also remain popular such as Hong Kong, Japan, and South Korea. Continued on A2
TO AVOID DELAYS DURING HOLY WEEK FLIGHTS, NNIC REMINDS PASSENGERS TO:
n Arrive early—at least three hours before international flights and two hours before domestic ones; n Double-check flight details and terminal assignments; n Make sure travel documents are complete; n Avoid bringing prohibited items in hand-carry or checked bags.
ONE REMINDER: While the airport is fully operational and support teams are on standby, passengers should expect larger crowds, longer lines at check-in and security, and possible delays due to the high volume of travelers.
PESO EXCHANGE RATES n US 57.2230 n JAPAN 0.3959 n UK 74.2468 n HK 7.3756 n CHINA 7.8248 n SINGAPORE 42.9828 n AUSTRALIA 35.6099 n EU 64.0669 n KOREA 0.0394 n SAUDI ARABIA 15.2448 Source: BSP (April 11, 2025)